A ban on upward-only rent reviews is now law as the English Devolution and Community Empowerment Act has received Royal Assent, a move that experts say could have a profound effect on the UK real estate market.
In a complete surprise to the UK real estate industry, the government announced plans to ban upward-only rent reviews for commercial leases last July as part of the Bill.
Upward-only rent reviews are common in UK commercial leases and mean the rent can only increase or stay the same at review. The ban on these clauses in commercial leases applies to England and Wales only. The government has said these "pit landlords against businesses and can make rents unaffordable and cause shops to shut".
It has added: "This will help keep small businesses running, boost local economies and job opportunities and help end the blight of vacant high streets and the unacceptable anti-social behaviour that comes with them."
The change will not affect existing contracts but will ban the introduction of upward-only clauses in new agreements. Landlords will need to choose between agreeing fixed rents or introducing a review clause that allows rents to fall as well as go up.
The ban will take effect in 2027, but a recent amendment now means some lease renewals dated on or after 17 March 2026 will also be caught by the ban.
Other measures in the Act
The wider details of the Bill can be read here. The government says it introduces new measures to expand devolution and empower mayors and local people. For example, a new Community Right to Buy will give local people the first right of refusal for community assets such as shops and community centres when they are put up for sale.
The Act introduces "Strategic Authorities" into law, to make it quicker to devolve powers from Whitehall. Strategic authorities with elected Mayors will receive more powers over transport, planning, housing and economic regeneration.
The Act also establishes Local Scrutiny Committees for mayoral authorities, which will provide scrutiny of local public spending and decision making.
Further measures include mandating Mayoral Strategic Authorities to develop local growth plans. There will be new powers for Mayors to intervene in planning applications of potential strategic importance, make mayoral development orders and charge a mayoral community infrastructure levy on developers.
'Significant step'
Melanie Leech, chief executive, British Property Federation, said today in a statement: “The granting of Royal Assent of the English Devolution Bill marks a significant step forward in creating new structures of governance that can, working with the private sector, exercise genuinely strategic powers over planning, place-making, and regeneration to boost economic growth across all parts of England, whether that be through housing, commercial or mixed-use development.
"Our experience of working with the existing Metro Mayors and Combined Authorities has been broadly positive in that their planning, placemaking and convening powers give larger investors confidence that there will be opportunities at the right scale to encourage major investment into new places, which we hope to see replicated with the new Strategic Authorities. However, we believe that this Act should be the just the starting point for further devolution, including fiscal devolution. The next stage must include a requirement on the new Strategic Authorities to ensure that employment planning, and not just housing, is handled strategically and consistently across local boundaries to reap the full benefits.
“The Act also introduces the controversial ban on upwards-only rent reviews, which, despite significant industry concern, was debated for only 40 minutes in the House of Lords. The government must now keep its promise to consult on the implementation details, including appropriate caps and collars for leases, if they are to mitigate the unintended consequences of this change. This is to ensure that current levels of long-term commercial property investment into UK towns can be maintained, along with the benefits this brings to public and private sector occupiers alike.”
Owen Spencer, senior lawyer (corporate occupiers) at Forsters, said: “If you thought you just heard a cheer, it might have been tenants celebrating - the ban on upwards-only rent reviews has now passed into law. But if you are a business looking to sign a new lease shortly, don’t uncork the sparkling wine just yet. At first glance, this is a win for occupiers, but the reality is more nuanced.
“Upwards-only rent reviews became the standard for a reason, providing certainty to investors and lenders in a market heavily shaped by inflation risk. Removing the mechanism doesn’t eliminate this risk, it simply forces landlords and their lenders to find new ways to mitigate it. So, what might we see? Shorter lease terms, higher headline rents, more frequent reviews, and increased use of indexation or stepped rents. In some cases, these alternatives may result in increased rental pressures and reduced tenant security. Lack of investor confidence could dampen future development, tightening the already chronic undersupply of stock and driving rents higher still. In many cases, these alternatives may leave occupiers actually facing higher costs than before.”
Antony Antoniou, chief executive of property agent Robert Irving Burns said: “The ban on upward only rent reviews is a solution looking for a problem that doesn’t exist. The legislation was drafted without meaningful consultation with industry and it shows.
“For hospitality operators who already invest huge amounts in capex up front, lease structures that allow them to amortise the investment over time are crucial. Removing certainty over rent will require a fundamental rethinking of their business model. Landlords who might have contributed to fit-outs or offered rent-free periods will have little incentive to do so going forward and higher starting rents will inevitably become the norm, along with shorter lease terms. For a sector that has already been hammered by business rate rises, this could be the final nail in the coffin.
“The ban will also have severe repercussions on investment. A lack of predictability over rent review timelines will make it difficult for banks to model rental income. Covenants will weaken and yields will invariably come under pressure.
“What our high streets are most in need of are investment and certainty. This delivers neither.”
Law firm Travers Smith head of property disputes Robert Payne, said: "In light of recent amendments, there is a risk that the backstop date of March 17 could create a two-tier market. We may end up with leases before the ban and leases after the ban, and the leases before will be more valuable, or perceived as more valuable.
"Landlords should plan now how best to approach the forthcoming ban on upwards-only rent reviews. Check for any options to renew in leases granted since 17 March 2026 and consider including stepped rent reviews or index-linked reviews plus break rights in leases that are currently under negotiation, instead of open-market rent reviews. With a consultation still to come on the impact of caps and collars, the full impact of the ban is not yet set in stone and landlords still have an opportunity to engage with Government."
Damian Gee, director in Colliers’ business space lease advisory team said the most pressing situation now will be for those leases that are in lawyers' hands or for those with an upcoming lease renewal, as there is a window before the ban will come into effect where both landlords and tenants may find it beneficial to enter into early discussions.
"Landlords would have the opportunity to ‘lock in’ upwards only rent reviews to provide long term rental stability and thus protect capital value, while occupiers will have a strengthened hand in the negotiations due to the incoming legislation.
"What is still unclear is whether the Government will consult on, the ability to include collars or minimum rents at rent review under the new legislation. There will be more details to come as we get closer to the act coming in to force.”
Focusing on the retail high street market which the legislation was designed to target, Callum Jeffreys, director in Colliers' retail lease advisory team added: “We have seen very little evidence of occupiers leveraging this legislation in negotiations since this was first mooted last summer. But what we have seen in prime retail markets have been landlords considering short term leases outside the Act and alternate index-linked rent reviews.
"We are, however, expecting to see a range of rent review provisions adopted across different markets which will reflect the parties’ strength of negotiating position, and that will create further polarisation between prime and secondary markets for investors.”
Will Densham, head of real estate dispute resolution at Eversheds Sutherland, said: “Despite some of the headlines, the ban on upwards only rent reviews is not yet law. What has passed is enabling legislation, with the real impact still to be shaped by secondary legislation – and that detail will matter.
“This is nevertheless a market‑significant shift. It rewrites how downside risk is managed across all commercial business leases, not just retail, and is likely to influence behaviour well before it comes into force.
“Rather than simplifying the market, the risk is increased complexity – with higher starting rents, greater reliance on indexation, shorter lease terms and a growing divide between legacy leases and new ones. Much will depend on where the government ultimately lands on caps, collars and exemptions, which is why (for now) landlords and tenants should be reviewing their pipeline deals.”
Chris Long, partner – lease consultancy – industrial and logistics, Newmark, said in a statement: "As currently drafted, the Bill has received Royal Assent but the substantive ban will not take into effect until commencement regulations follow a separate consultation on caps and collars – most likely in 2027 or 2028. The most material change is the partial retrospective effect for renewal arrangements entered into on or after 17 March 2026. The wider implication is a structural shift in how I&L income is created, valued and financed – moving the market away from the traditional underwriting of rental income and towards fixed, stepped and inflation-linked rents, alongside increased consideration of two-way rent mechanisms.”
Neil Seager, managing partner, Haslams Chartered Surveyors, said: "The market does not need further uncertainty or disruption. This ban feels like a sledgehammer to crack a nut. I can see some merit in making it use-class specific, but I suspect the coming months will be spent ironing out the many loopholes and practical issues in trying to make the legislation fit for purpose – likely keeping solicitors busy for some time yet. Rather than taking a broad swipe at the commercial property market, the government should focus on fixing the unfair business rates system, which is the real drain on tenants."
This article will be updated with reaction.